Watch Live

Tweet TWEET

C.H. Robinson Reports Third Quarter Results

  C.H. Robinson Reports Third Quarter Results

Business Wire

MINNEAPOLIS -- November 5, 2013

C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ:CHRW), today reported
financial results for the quarter ended September 30, 2013. Summarized
financial results for the quarter ended September 30 are as follows (dollars
in thousands, except per share data):

                                                          
                   Three months ended September 30,            Nine months ended September 30,
                   2013          2012          %           2013          2012          %
                                                   change                                      change
                                                                                      
Total revenues     $ 3,316,665     $ 2,880,409     15.1  %     $ 9,599,194     $ 8,388,237     14.4  %
                                                                                               
Net revenues:
Transportation
Truckload          $ 265,509       $ 269,097       -1.3  %     $ 798,448       $ 788,872       1.2   %
LTL                  61,436          58,863        4.4   %       180,638         167,135       8.1   %
Intermodal           10,202          10,074        1.3   %       29,223          29,804        -1.9  %
Ocean                49,692          18,498        168.6 %       141,304         51,217        175.9 %
Air                  18,137          9,046         100.5 %       55,107          28,496        93.4  %
Customs              8,932           4,109         117.4 %       27,307          11,443        138.6 %
Other
logistics           16,070       13,087        22.8  %      50,348       42,029        19.8  %
services
Total                429,978         382,774       12.3  %       1,282,375       1,118,996     14.6  %
transportation
Sourcing             30,553          33,747        -9.5  %       101,151         105,895       -4.5  %
Payment             2,775        16,149        -82.8 %      8,104        48,048        -83.1 %
services
Total net            463,306         432,670       7.1   %       1,391,630       1,272,939     9.3   %
revenues
                                                                                                     
Operating           286,951      245,413       16.9  %      864,093      731,223       18.2  %
expenses
Operating            176,355         187,257       -5.8  %       527,537         541,716       -2.6  %
income
Net income         $ 107,737     $ 116,330       -7.4  %     $ 322,952     $ 337,412       -4.3  %
Diluted EPS        $ 0.69          $ 0.72          -4.2  %     $ 2.03          $ 2.08          -2.4  %
                                                                                               

Pro Forma Comparison - The following shows the effects of the disposition of
the Company’s T-Chek Payment Services business (“T-Chek”), which was completed
in October 2012, and the acquisition of Phoenix International Freight
Services, Ltd. (“Phoenix”), which was completed in November 2012, as if these
transactions had occurred at the beginning of 2012.  A reconciliation of these
pro forma measures is described on page 4.

                                                 
               Three months ended September 30,       Nine months ended September 30,
               2013        2012        %          2013          2012          %
            Reported    Pro Forma   change     Reported      Pro Forma     change
Total net      $ 463,306     $ 461,789     0.3  %     $ 1,391,630     $ 1,358,849     2.4  %
revenues
Income
from             176,355       190,233     -7.3 %       527,537         547,132       -3.6 %
operations
                                                                                           

Discussion of Third Quarter 2013 Results

Our truckload net revenues decreased 1.3 percent in the third quarter of 2013
compared to the third quarter of 2012. Our truckload volumes increased
approximately 13 percent in the third quarter of 2013 compared to the third
quarter of 2012. Our North American truckload volumes increased approximately
nine percent. We estimate that our acquisition of Apreo Logistics S.A.
(“Apreo”), which was completed in October 2012, contributed approximately four
percent to our volume growth in the third quarter of 2013. Our truckload net
revenue margin decreased in the third quarter of 2013 compared to the third
quarter of 2012, due primarily to increased cost per mile. In North America,
excluding the estimated impacts of the change in fuel, our average truckload
rate per mile charged to our customers increased approximately two percent in
the third quarter of 2013 compared to the third quarter of 2012. In North
America, our truckload transportation costs increased approximately four
percent, excluding the estimated impacts of the change in fuel.

Our less-than-truckload (“LTL”) net revenues increased 4.4 percent in the
third quarter of 2013 compared to the third quarter of 2012. The increase was
driven by an increase in total shipments of approximately five percent,
partially offset by decreased net revenue margin.

Our intermodal net revenues increased 1.3 percent in the third quarter of 2013
compared to the third quarter of 2012. This was due to increased net revenue
margin, partially offset by decreased volumes. Our net revenue margin increase
was due to a change in our mix of business.

Our ocean transportation net revenues increased 168.6 percent, our air
transportation net revenues increased 100.5 percent, and our customs net
revenues increased 117.4 percent in the third quarter of 2013 compared to the
third quarter of 2012. These increases were primarily due to our acquisition
of Phoenix in November 2012.

Sourcing net revenues decreased 9.5 percent in the third quarter of 2013
compared to the third quarter of 2012. Cost of products sourced for resale
increased as a result of lower crop yields primarily due to weather. We also
lost certain commodity business with a significant customer.

Our Payment Services net revenues decreased 82.8 percent in the third quarter
of 2013 compared to the third quarter of 2012 due to the T-Chek divestiture in
the fourth quarter of 2012.

For the third quarter, operating expenses increased 16.9 percent to $287.0
million in 2013 from $245.4 million in 2012. Operating expenses as a
percentage of net revenues increased to 61.9 percent in the third quarter of
2013 from 56.7 percent in 2012. During the third quarter of 2013, operating
expenses grew faster than net revenues primarily as a result of an increase in
headcount, including the impact of the Apreo and Phoenix acquisitions, and the
amortization of acquisition-related intangible assets. Phoenix has a higher
expense to net revenue ratio than C.H. Robinson has historically experienced.

For the third quarter, personnel expenses increased 14.0 percent to $204.4
million in 2013 from $179.3 million in 2012. This was due to an increase in
our average headcount of approximately 30 percent, related primarily to the
acquisitions of the Phoenix and Apreo in the fourth quarter of 2012. We
estimate that our average headcount, excluding acquisitions and divestitures,
increased approximately eight percent in the third quarter of 2013 compared to
2012. The personnel expense increase was partially offset by declines in the
expenses related to incentive plans that are designed to keep expenses
variable with changes in net revenues and profitability. The increase in
personnel expenses was also partially offset by the divestiture of T-Chek in
October 2012.

For the third quarter, other selling, general, and administrative expenses
increased 25.0 percent to $82.6 million in 2013 from $66.1 million in 2012.
This increase was driven primarily by Phoenix operations, partially offset by
the divestiture of T-Chek. For the third quarter, acquisition amortization
expense increased to $5.0 million in 2013 from $1.0 million in 2012 primarily
as a result of the finite-lived intangible assets recorded in connection with
the acquisition of Phoenix.

Founded in 1905, C.H. Robinson Worldwide, Inc., is one of the largest
non-asset based third party logistics companies in the world. C.H. Robinson is
a global provider of multimodal transportation services and logistics
solutions, currently serving over 42,000 active customers through a network of
285 offices in North America, South America, Europe, Asia, and Australia. C.H.
Robinson maintains one of the largest networks of motor carrier capacity in
North America and works with approximately 56,000 transportation providers
worldwide.

Except for the historical information contained herein, the matters set forth
in this release are forward-looking statements that represent our
expectations, beliefs, intentions or strategies concerning future events.
These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from our
historical experience or our present expectations, including, but not limited
to such factors as changes in economic conditions, including uncertain
consumer demand; changes in market demand and pressures on the pricing for our
services; competition and growth rates within the third party logistics
industry; freight levels and increasing costs and availability of truck
capacity or alternative means of transporting freight, and changes in
relationships with existing truck, rail, ocean and air carriers; changes in
our customer base due to possible consolidation among our customers; our
ability to integrate the operations of acquired companies with our historic
operations successfully; risks associated with litigation and insurance
coverage; risks associated with operations outside of the U.S.; risks
associated with the potential impacts of changes in government regulations;
risks associated with the produce industry, including food safety and
contamination issues; fuel prices and availability; the impact of war on the
economy; and other risks and uncertainties detailed in our Annual and
Quarterly Reports.

Any forward-looking statement speaks only as of the date on which such
statement is made, and we undertake no obligation to update such statement to
reflect events or circumstances arising after such date. All remarks made
during our financial results conference call will be current at the time of
the call and we undertake no obligation to update the replay.

Non-GAAP vs. GAAP Financial and Pro Forma Financial Measures
To assist investors in understanding our financial performance, we supplement
the financial results that are generated in accordance with the accounting
principles generally accepted in the United States, or GAAP, with non-GAAP
financial measures from time to time. We use non-GAAP measures, including
those set forth in this release, to assess our operating performance for the
quarter. Management believes that these non-GAAP financial measures reflect an
additional way of analyzing aspects of our ongoing operations that, when
viewed with our GAAP results, provides a more complete understanding of the
factors and trends affecting our business. However, non-GAAP results should
not be regarded as a substitute for corresponding GAAP measures, and should be
viewed in conjunction with our consolidated financial statements prepared in
accordance with GAAP. To provide investors with information to assist them in
assessing our financial results on a comparable basis with historical results,
we have provided certain non-GAAP financial measures in this press release
that include the effects of the disposition of T-Chek and the acquisition of
Phoenix as if they had occurred at the beginning of our 2012 fiscal year.

A reconciliation of our reported results to pro forma financial measures for
the quarter ended September 30, 2012 is as follows (dollars in thousands):

                                                          
                                    T-Chek          Phoenix
                    Reported        Operations      Operations     Pro Forma
                                    ^(1)            ^(1)
Total revenues      $ 2,880,409     $ (13,204 )     $  216,219     $ 3,083,424
                                                                   
Purchased
transportation        2,063,109       -                173,896       2,237,005
and related
services
Purchased
products             384,630        -              -            384,630
sourced for
resale
Total purchased
services and         2,447,739      -              173,896      2,621,635
products
Net revenues ^        432,670         (13,204 )        42,323        461,789
(2)
                                                                   
Personnel             179,342         (3,470  )        20,799        196,671
expenses
Selling,
general and           65,112          (2,855  )        7,602         69,859
administrative
expenses
Amortization of
acquisition          959            -              4,067        5,026
intangibles
Total other
operating            245,413        (6,325  )       32,468       271,556
expenses
                                                                   
Income from         $ 187,257       $ (6,879  )     $  9,855       $ 190,233
operations
                                                                     

     Adjustments have been made to historical Phoenix operations for the
     addition of amortization expense of finite-lived intangible assets
     recorded in connection with the acquisition ($4.1 million), rent expense
     for lease agreements entered into in connection with the acquisition ($84
     thousand), and depreciation on a building acquired in the acquisition
1.  ($37 thousand). An adjustment has also been made to reduce purchased
     transportation and related services ($7.3 million) and other selling,
     general, and administrative expenses ($13.5 million) and to increase
     personnel expenses ($20.8 million) to conform to C.H. Robinson’s
     historical financial reporting presentation. There were no pro forma
     adjustments to the T-Chek historical results.
     
     Net revenues are our total revenues less purchased transportation and
2.   related services, including contracted motor carrier, rail, ocean, air,
     and other costs, and the purchased price and services related to the
     products we source.
     

A reconciliation of our reported results to pro forma financial measures for
the nine months ended September 30, 2012 is as follows (dollars in thousands):

                                                          
                                    T-Chek          Phoenix
                    Reported        Operations      Operations     Pro Forma
                                    ^(1)            ^(1)
Total revenues      $ 8,388,237     $ (39,333 )     $  622,827     $ 8,971,731
                                                                   
Purchased
transportation        5,980,489       -                497,584       6,478,073
and related
services
Purchased
products             1,134,809      -              -            1,134,809
sourced for
resale
Total purchased
services and         7,115,298      -              497,584      7,612,882
products
Net revenues ^        1,272,939       (39,333 )        125,243       1,358,849
(2)
                                                                   
Personnel             539,964         (11,176 )        61,899        590,687
expenses
Selling,
general and           188,622         (8,781  )        26,352        206,193
administrative
expenses
Amortization of
acquisition          2,637          -              12,200       14,837
intangibles
Total other
operating            731,223        (19,957 )       100,451      811,717
expenses
                                                                   
Income from         $ 541,716       $ (19,376 )     $  24,792      $ 547,132
operations
                                                                     

     Adjustments have been made to historical Phoenix operations for addition
     of amortization expense of finite-lived intangible assets recorded in
     connection with the acquisition ($12.2 million), rent expense for lease
     agreements entered into in connection with the acquisition ($252
     thousand), and depreciation on a building acquired in the acquisition
1.  ($111 thousand). An adjustment has also been made for the elimination of
     contractual changes in compensation ($5.1 million). An adjustment has
     also been made to reduce purchased transportation and related services
     ($21.9 million) and other selling, general, and administrative expenses
     ($45.1 million) and to increase personnel expenses ($67.0 million) to
     conform to C.H. Robinson’s historical financial reporting presentation.
     There were no pro forma adjustments to the T-Chek historical results.
     
     Net revenues are our total revenues less purchased transportation and
2.   related services, including contracted motor carrier, rail, ocean, air,
     and other costs, and the purchased price and services related to the
     products we source.
     

Conference Call Information:
C.H. Robinson Worldwide Third Quarter 2013 Earnings Conference Call
Wednesday November 6, 2013 8:30 a.m. Eastern Time
The call will be limited to 60 minutes, including questions and answers. We
invite call participants to submit questions in advance of the conference call
and we will respond to as many of the questions as we can in the time allowed.
If time permits, we will accept live questions. To submit your question(s) in
advance of the call, please email tim.gagnon@chrobinson.com.

Presentation slides and a simultaneous live audio webcast of the conference
call may be accessed through the Investor Relations link on C.H. Robinson’s
website at www.chrobinson.com
To participate in the conference call by telephone, please call ten minutes
early by dialing: 877-941-0844
Callers should reference the conference ID, which is 464248#
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on November 9:
800-406-7325; passcode: 4642488#


CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)

                 Three months ended              Nine months ended
                   September 30,                     September 30,
                   2013            2012            2013            2012
                                                                       
Revenues:
Transportation     $ 2,880,901       $ 2,445,883     $ 8,302,160       $ 7,099,485
Sourcing             432,373           418,377         1,287,036         1,240,704
Payment             3,391           16,149         9,998           48,048
Services
Total revenues      3,316,665       2,880,409      9,599,194       8,388,237
Costs and
expenses:
Purchased
transportation       2,450,923         2,063,109       7,019,785         5,980,489
and related
services
Purchased
products             401,820           384,630         1,185,885         1,134,809
sourced for
resale
Purchased
payment              616               -               1,894             -
services
Personnel            204,388           179,342         623,042           539,964
expenses
Other selling,
general, and        82,563          66,071         241,051         191,259
administrative
expenses
Total costs         3,140,310       2,693,152      9,071,657       7,846,521
and expenses
                                                                       
Income from         176,355         187,257        527,537         541,716
operations
                                                                       
Investment,
interest, and
other               (2,635    )      76             (3,284    )      976
(expense)
income
                                                                       
Income before
provision for        173,720           187,333         524,253           542,692
income taxes
Provision for       65,983          71,003         201,301         205,280
income taxes
Net income         $ 107,737        $ 116,330       $ 322,952        $ 337,412
                                                                       
Net income per     $ 0.69            $ 0.72          $ 2.03            $ 2.09
share (basic)
Net income per
share              $ 0.69            $ 0.72          $ 2.03            $ 2.08
(diluted)
Weighted
average shares       156,924           160,782         158,820           161,784
outstanding
(basic)
Weighted
average shares       157,044           161,003         158,884           162,042
outstanding
(diluted)
                                                                         


CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

                                              September 30,   December 31,
                                                2013              2012
Assets
Current assets:
Cash and cash equivalents                       $  129,723        $  210,019
Receivables, net                                   1,564,997         1,412,136
Other current assets                              58,721           50,135
Total current assets                               1,753,441         1,672,290
                                                                  
Property and equipment, net                        155,693           149,851
Intangible and other assets                       982,434          982,084
Total Assets                                    $  2,891,568      $  2,804,225
                                                                  
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks         $  810,742        $  707,476
Accrued compensation                               79,770            103,343
Accrued income taxes                               23,899            121,581
Other accrued expenses                             41,820            46,171
Current portion of debt                           350,000          253,646
Total current liabilities                          1,306,231         1,232,217
                                                                  
Noncurrent income taxes payable                    21,196            20,590
Deferred tax liabilities                           74,691            45,113
Long-term debt                                     500,000           -
Other long term liabilities                       887              1,933
Total liabilities                                  1,903,005         1,299,853
                                                                  
Total stockholders’ investment                    988,563          1,504,372
Total liabilities and stockholders’             $  2,891,568      $  2,804,225
investment
                                                                     


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)

                                             Nine months ended
                                               September 30,
                                               2013             2012
Operating activities:
Net income                                     $ 322,952          $ 337,412
Stock-based compensation                         10,856             21,077
Depreciation and amortization                    42,052             26,081
Provision for doubtful accounts                  10,323             8,143
Deferred income taxes                            28,696             3,856
Other                                            232                2,490
Changes in operating elements
Receivables                                      (197,468   )       (203,361 )
Prepaid expenses and other                       (10,465    )       (2,042   )
Accounts payable and outstanding checks          103,226            111,628
Accrued compensation                             (23,023    )       (28,230  )
Accrued income taxes                             (94,027    )       689
Other accrued liabilities                       (10,425    )      (10,587  )
Net cash provided by operating activities        182,929            267,156
                                                                  
Investing activities:
Purchases of property and equipment              (27,861    )       (28,096  )
Purchases and development of software            (6,375     )       (10,795  )
Acquisitions, net of cash                        19,126             -
Other                                           221              206      
Net cash used for investing activities           (14,889    )       (38,685  )
                                                                  
Financing activities:
Borrowings on line of credit                     3,054,023          -
Repayments on line of credit                     (2,957,669 )       -
Borrowings of long-term debt                     500,000            -
Payment of contingent purchase price             (927       )       (11,613  )
Net repurchases of common stock                  (700,631   )       (163,412 )
Excess tax benefit on stock-based                26,180             9,831
compensation
Cash dividends                                  (167,130   )      (163,273 )
Net cash used for financing activities           (246,154   )       (328,467 )
Effect of exchange rates on cash                (2,182     )      (718     )
                                                                  
Net change in cash and cash equivalents          (80,296    )       (100,714 )
Cash and cash equivalents, beginning of         210,019          373,669  
period
Cash and cash equivalents, end of period       $ 129,723         $ 272,955  
                                                                  
                                               As of September 30,
                                               2013               2012
Operational Data:
Employees                                        11,533             8,811
Branches                                         285                234
                                                                             

Contact:

C.H. Robinson Worldwide, Inc.
Chad Lindbloom, 952-937-7779
chief financial officer
or
Tim Gagnon, 952-683-5007
director, investor relations